Having a secured source of income after retirement is very necessary to maintain the standard of living. For the people who work in public sector units, there is less need to worry since pension covers up their expense. This can be concerning especially when you have a business, or you have a private-sector job. There is little provision over there for getting a fixed income after retirement. The good thing here is that the government is stepping up the measures to ensure a constant stream of income for people after retirement.
The government collaborated with Life Insurance Corporation of India to launch a similar scheme. This pension policy is known as Pradhan Mantri Vaya Vandana Yojana, and it is a single premium policy. You can choose the amount of pension and pay the premium accordingly. The ministry of finance decides the return on this policy every year. For this year, the returns were calculated to be 7.66%. After a given date, the policyholder receives the monthly pension for the surviving term or the policy term. This policy is also exempted from GST. So, let us go ahead, and check out the more details about this single premium Pension Policy from LIC.
Eligibility Criteria for LIC Pradhan Mantri Vaya Vandana Yojana
In this section, we have listed the details of eligibility criteria associated with this pension plan. Check them out now.
- The minimum entry age of the plan is 60 years, and you would not be able to purchase the plan before that.
- There is no concept of maximum entry age for this policy.
- The policy term for this pension scheme is ten years.
- You can choose the pension payment as monthly, quarterly, half-yearly or annually.
Premium & Pension Limits
Check out the tables below to understand the minimum and the maximum premium limits that are associated with the policy.
| Purchase Price | Monthly | Quarterly | Semi-Annual | Annual |
| Minimum Amount | Rs 1,62,162 | Rs 1,61,074 | Rs 1,59,574 | Rs 1,59,658 |
| Maximum Amount | Rs 15,00,000 | Rs 14,89,933 | Rs 14,76,064 | Rs 14,49,086 |
| Pension Amount | Monthly | Quarterly | Semi-Annual | Annual |
| Minimum Amount | Rs 1,000 | Rs 3,000 | Rs 6,000 | Rs 12,000 |
| Maximum Amount | Rs 9,250 | Rs 27,750 | Rs 55,000 | Rs 1,11,000 |
Benefits of LIC Pradhan Mantri Vaya Vandana Yojana
There are multiple benefits associated with this LIC Policy. You can check out the details now.
- Pension payment – The pension payment is constant as per the amount promised at the time of policy issue. In addition to this, there is no need of going to the LIC office to collect the Pension Payment. These payments are sent to account directly.
- Maturity Benefit – As per the policy documents, the maturity benefits includes the return of the purchase price. In addition to this, at maturity, the user will also get the final pension instalment as per their plan.
- Death Benefit – In case of the death of policyholder before the maturity date of the policy, the nominee will receive the purchase price of the policy. The pension is paid on pro-rata bases, and the policy is then concluded.
- Loan – The policyholder can avail the loan after three years of the policy. The loan amount can be extended to 75% of the total policy price. In addition to this, the policyholder can pay the interest only. The principle can be paid directly from the purchase price at maturity.
- Surrender Value – If the policyholder comes across a contingency, then they can also surrender the policy. The surrender value of the policy is 98% of the purchase amount, and this would help the policyholder in dealing with the immediate expense.
- Free Lock-in Period – You also get a free lock-in period of 15 days wherein you can terminate the policy if you do not like the terms and conditions. The entire amount would be refunded to you after the deductions of the stamp duty, and pension paid. If the policy is purchased online, the free lock-in period is 30 days.
- Tax Benefits – You do not receive tax benefits as per the policy documents. The pension is taxable, and hence if you have income over the threshold, then you will end up paying the taxes as well. The tax rates are marginal so that you can ignore that aspect.
How to invest in LIC Pradhan Mantri Vaya Vandana Yojana
It is possible to buy this policy Online as well as Offline. Check out the procedures to purchase the policy online and offline below.
Online Purchase
- Start by navigating to licindia.in, and click on Products.
- From the list of products, select Pension Plans.
- Now, select Pradhan Mantri Vaya Vandana Yojana, and click on Buy Online Option.
- You will be required to submit the details on the form, and this will generate an access id for you.
- Now, enter the access id, email ID, and mobile number, and click on proceed button. You can now choose the plan according to your needs.
- Pay the premium, and the policy will be generated for you. The online copy can be downloaded, and the physical copy will be mailed to you.
Offline Purchase
- For the offline purchase, you would need to contact the LIC Agent or the LIC Branch.
- Once you contact them, obtain the forms from them, and submit the form along with the documents, and the cheque for the premium payment.
- Collect the receipt along with the policy documents. Here, ensure that you are making payments via cheque, and the payments should be made in favour of LIC only.
Documents Required for Application
You will be required to submit some documents at the time of policy purchase. Check out the list of documents that you would need to submit.
- Age Proof
- Address Proof
- Retirement Proof
- Aadhaar Card
- Bank Account Details for NEFT
- Passport Size Photo
Exclusions & Demerits of LIC Pradhan Mantri Vaya Vandana Yojana
Talking about the exclusions of this policy, it should be noted that suicide is not covered in the policy. In the case of suicide, policy gets terminated, and the nominee of the policy receives the purchase price of the policy.
There are also certain demerits associated with the policy, and you can check out these points below.
- The money will be locked in for ten years, and if you need the money for any medical emergencies, then you will not be able to withdraw it.
- The inflation rate in India hovers around 6% to 8%. In such a case, the purchasing power of what is Rs 5000 will reduce by 50% in the ten years. Whereas the returns that you get on the policy remains constant, and it is a major shortcoming of the policy.
Final Verdict
We always recommend people to start planning for their retirement early. We are sure that you would not like to compromise with the quality of living after you retire. In such a case, the pension plans can be of great help. If you have a good amount of corpus saved for your retirement, you can go ahead and invest in the policy right now. Have some deferment period before the pension starts. This deferment period will allow your corpus to grow further. So, with this, we are going to conclude the page. If you have any more questions about the LIC Pradhan Mantri Vaya Vandana Yojana, then you can visit www.licindia.in, and get answers to your questions.